Should I let my truck go or my credit cards and RothIRA?

Im 25 with a career making 50-66k a year. With a 401k. I also have a IRA with 400 a month going in. $6200 on a discover and $4200 on citi card in debt. Problem is, Auto is $17k neg equity. balance is 38k. Auto payment $635. My budget is MIN payment to discover $125 and $189 citi. 125-189-400 is over my auto payment. I can put $79 into IRA. But must let credit cards go. I have the 401k and im only 25. IRA could wait. I can pay off pretty much my 10500 in credit card debit in one year. Or pay the auto, but will take much longer to pay off. But pay down to sell and get out of under it. Credit cards I could mabey have them settle for less. Keep auto, but pay a lot of neg equity and time. I dont want cards or the auto anymore, but dont want to default on both. But cant pay for both. I gotta let something go. I have another car worth around $4500. I would drive this so I would keep miles on repo auto down to hold its value, for higher sale later. I also have only $126.00 in savings after buying the $4500 car. Thats today. Should I work on paying 38k auto or cards and save money.

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Answer 1 / 1 - Submitted 14 days ago...

LauraT2009

Expert (802)

I would forget about about your roth IRA and clear your debts. Interest rates at the minute are low so now is the time to get clear of debts. When you clear your debts you can save in the future, especially since you have a good salary. I would concentrate on paying the credit cards first, as you have said you could clear them in a year. Getting totally clear of one debt is much better than trying to pay several at one time. Alternatively you could go for loan consolidation and combine all your debts.

If you want to keep your car with negative equity why don't you sell the other car you bought for $4500, this could be an extra $4500 to help you pay your credit card debt and other auto. By selling this and stopping roth ira payments you would have an extra $9300 this year which would pay a good part of your credit card debts. Then you can focus on paying your auto back. Once you ahve your auto paid back you can then think about reopening your roth ira and saving again.

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